Despite the mounting Greece tensions and volatility spike that greeted the week, by Wednesday the market appeared stable enough for Ecolab and Danaher to make opportunistic strikes. This was in keeping with a popular approach by syndicate bankers to volatility, in preparing issuers to pounce on windows of stability for however briefly they open.
Those two issuers seized on Wednesday as one such opportunity. And, with the pipeline said to be growing, there could be a surge next week if the situation in the eurozone eases.
While Danaher is raising funds to pay some of its acquisition of Pall Corporation, Ecolab aims to repay existing paper.
Leveraged finance may consider itself insulated from the macro vagaries affecting other capital markets. But the reality is not bearing that out.
Orion Engineered Carbons became the fourth borrower in June to blame difficult market conditions as it pulled a €780m loan repricing yesterday.
Some loans bankers are prepared to jump into choppy markets, with no talk yet of a shutdown. But premiums will have to be paid as with Douglas Holdings last week, widening pricing to 500bp with a 1% Euribor floor on its €1.22bn acquisition loan.
Douglas Holdings is the only borrower to have navigated the euro high yield bond market amid the Greek turbulences of the past two weeks. But the borrower paid up to reduce its bond offering twice to €635m from €1bn, before pricing it last Friday. Douglas sold its €335m eight year unsecured tranche, with ratings of Caa1/CCC+, to yield 8.75% at the wide end of guidance, while its secured tranche, €300m of seven year notes rated B1/B, printed to yield 6.25% at the tight end.
So far there has been no other high yield issuance this week, and next week may be no better. Investors and bankers alike have presented reassuring arguments about high yield bond market resilience, claiming that the influence of the Greek government’s negotiation style on politics elsewhere in peripheral Europe can be contained. Barclays data backs up this view so far, with outflows from European high yield funds moderate and cash levels remaining as high as 7% in awaiting the resolution of the eurozone’s big fat Greek question.
Bankers also look at the high yield bond pipeline with confidence, since borrowers such as French glass manufacturer Verallia and German laboratory operator Synlab appear near to launching notes.
In investment grade loans, Norwegian oil companies Statoil and Det Norske have increased their borrowing facilities despite oil price woes. Oil exploration company Det Norske increased the borrowing base under its reserve base lending facility to $2.9bn from $2.8bn and increased a revolving credit facility to $550 from $500m. Statoil, the Norwegian oil and gas company, has signed a $5bn revolving credit facility which received strong demand from banks, despite the company's sizeable first quarter loss of $4.5bn.
Meanwhile Fiat Chrysler Automobiles has stepped out for its first loan refinancing since its mega-merger last year. The new €5bn RCF was increased in syndication from €4.8bn, there are 24 banks in the syndicate. The loan refinances debt signed by FCA (formerly Fiat Group Automobiles) in 2013 and FCA US (previously Chrysler) in 2011.
Dan Alderson, syndicated loans editor +44 207 779 7311
Jon Hay, corporate finance editor +44 207 779 7321
Victor Jimenez, high yield +44 207 779 7379
Ross Lancaster, leveraged loans +44 207 779 7322
Nathan Collins, corporate bonds +44 207 779 7318
Elly Whittaker, investment grade loans +44 207 779 8361
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Orion Engineered Carbons pulls repricing in fourth casualty this month